Governing Rules for Age-Restricted Communities

Ed. note:  this month’s column was written by my associate Ben Karb.

Question:  I live in a subdivision that was marketed as a 55+ community, but I cannot determine that the developer included any age restrictions in our Master Deed.  If the developer did not include the “legal” requirements in the Master Deed or our CC&Rs, what can be done to be sure that our development meets the legal requirements?  I read about an “80%” rule for communities like ours, but that seems rather hard to keep up with.  Does this mean we need to track the age of all people who live here?

Answer:  It sounds like you live in a community that was intended as an “age-restricted” community, which we are seeing with more regularity, especially in states with comparatively lower costs of living or with favorable tax laws.  North Carolina and South Carolina are prime examples.  I searched Google for “Carolinas 55+” and it seems that there is an endless supply of new “active adult” communities throughout the Carolinas, many of which are either under development currently or were developed within the last ten years.

Although young by real estate standards, age-restricted communities were created over thirty years ago when Congress revised the federal housing protections afforded to families.  Congress amended the Fair Housing Act to prohibit discrimination on the basis of “familial status”, and in the process, adopted the Housing for Older Persons Act (referred to as “HOPA”), which ironically allows discrimination on the basis of age.

Yes, you read that correctly:  HOPA requires that an age-restricted community discriminate on the basis of age.  There are several categories of age-restricted communities, but the most common HOPA classification is for communities that restrict occupancy to those aged 55 or older.

HOPA Requirements

HOPA requires that the community be “intended and operated for occupancy by persons 55 years of age or older”.  There are several requirements that must be met, including that the community adopts policies and procedures that restrict the age of its occupants so that at least 80% of households have at least one occupant at least 55 or older.  The 80% requirement is referred to as the 80/20 rule: at least 80% of homes must be occupied by at least one person 55 or older, and as many as 20% may be occupied by people below age 55.  It is dangerous to flirt with 20%, and it is merely a “safety valve” since it can be difficult to ensure that 100% of occupants, at all times, are aged 55 or older.

Every 55+ community is required to periodically survey its members to ensure compliance with the 80/20 rule.  These surveys must be reliable, including verification of occupants’ ages based on driver’s licenses, passports, birth certificates, or other government-authorized types of information.  So, to answer your question, yes, the community will need to track the age of its occupants.

South Carolina and North Carolina Communities

Since you refer to a “Master Deed”, it sounds like you live in a condominium in South Carolina, where the document that forms the condominium is known as a Master Deed.  In North Carolina, the document is referred to as a Declaration of Condominium.  Regardless of which state you live in, HOPA applies equally since it is a federal law.  Age-restricted communities are found within communities governed as single-family or townhome-style homeowners associations, as well as in condominiums.  Some HOPA communities have a mixture of homeowners’ associations and condominiums.

No matter which state you live in, it sounds like the developer may be setting the community up for problems.  If the governing documents do not allow the Association to regulate the age of owners, it could be difficult to enforce the 80/20 rule, or even to require the community to establish age-restrictive policies and procedures.  This could portend serious legal problems if the community cannot demonstrate compliance with HOPA.  You may want to consider consulting with an attorney to determine if the governing documents do contain HOPA-related provisions since they can sometimes be buried deep within a document.  If the documents do not contain appropriate provisions, you and your attorney should consider how to encourage the developer or the membership to amend the governing documents to comply with the federal requirements.

This column was originally published in the Home|Design section of the Charlotte Observer on September 21, 2019. © All rights reserved.

Original article can be found at: https://www.offitkurman.com/blog/2019/10/29/rules-for-age-restricted-communities/